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Goldman Sachs: We were wrong about Apple

·Anchor, Editor-at-Large
·2 min read
In this article:
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After a blowout quarter from tech giant Apple, Goldman Sachs' long-time bearish analyst covering the stock is admitting defeat. 

"We are upgrading our rating from Sell to Neutral after Apple posted another large beat and implied a raise vs. our June revenue expectations. Our original view that the iPhone cycle would disappoint in the midst of COVID was clearly wrong. Not only has Apple done better than we expected on iPhone during the cycle but Mac and iPad have also materially outperformed our forecasts," analyst Rod Hall said in an early morning note Thursday after Apple's second quarter earnings. 

Hall acknowledges that since he placed Apple's stock on Goldman's closely watched Americas Sell List on April 16, 2020, shares have surged 86%. The S&P 500 is up 49%. 

GREECE - 2021/04/26: In this photo illustration, an Apple logo seen displayed on a smartphone screen with a computer keyboard in the background. (Photo Illustration by Nikolas Joao Kokovlis/SOPA Images/LightRocket via Getty Images)
GREECE - 2021/04/26: In this photo illustration, an Apple logo seen displayed on a smartphone screen with a computer keyboard in the background. (Photo Illustration by Nikolas Joao Kokovlis/SOPA Images/LightRocket via Getty Images)

While Hall has consistently voiced concern on the iPhone 12 demand and whether there would be a 5G upgrade supercycle, the call has gone south as people have stocked up on Apple products during the pandemic. Moreover, the iPhone 5G has been well received in the marketplace ... only fueling supercycle views among investors.

And all of that was on display in Apple's second fiscal quarter. Quarterly iPhone sales surged 66%, wearable sales rose 25% and services sales gained 27%. 

Here is how Apple performed compared to Wall Street estimates in the quarter.

  • Revenue: $89.58 billion versus $77.3 billion expected

  • Earnings per share: $1.40 versus $0.99 expected

  • iPhone revenue: $47.9 billion versus $41.5 billion expected

  • iPad revenue: $7.8 billion versus $5.6 billion expected

  • Mac revenue: $9.1 billion versus $6.8 billion expected

The company ended the quarter with a shocking $204 billion in cash. Apple revealed a new $90 billion stock buyback and raised its dividend by 7%.

Apple shares rose 3% in pre-market trading on Thursday. 

Yahoo Finance's Dan Howley contributed to this story.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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